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US oil dips on growth worry, set for monthly loss
Source: Agencies |
September 1, 2010, Wednesday
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US crude prices fell yesterday as concerns about stalled economic growth and high US inventories kept oil on track for its first monthly decline since May.
US crude for October delivery fell US$1.95, or 2.61 percent to US$72.75 a barrel by 12:30 p.m. EDT (1630 GMT), having traded from US$72.61 to US$74.73. ICE Brent for October dropped US$1.64 to US$74.96 a barrel.
The market was awaiting US inventory data from the American Petroleum Institute at 4:30pm EDT (2030 GMT), with analysts in a preliminary Reuters poll forecasting a 1.3-million-barrel gain in crude stocks in the week to Aug. 27.
Adding to the bearish sentiment was a report from the Institute for Supply Management-Chicago that showed business activity in the US Midwest slowed in August.
But oil regained some ground after data showed US single-family home prices rose more than expected in June and again when the Conference Board said US consumer confidence rose in August.
"Crude got some bounce from the consumer confidence and home price numbers that lifted the stock market, but the (oil) market is cautious ahead of the big jobs number on Friday," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
Wall Street erased initial losses and moved higher after the consumer confidence and home price reports helped soothe some investor anxiety about the strength of the economy.
Still on tap for yesterday release are the Federal Open Market Committee's minutes from its Aug. 10 meeting. On Friday, markets will react to the key August US nonfarm payrolls report.
Data from Japan was mixed, with total oil product sales up more than expected in July, but August manufacturing activity expanding at the slowest pace in more than a year.
Crude failed to get a boost from further weakness in the dollar. The yen came within reach of a 15-year high against the US currency, which slipped against the euro. The dollar index also weakened.
A weak dollar can boost oil prices because it makes dollar-denominated oil cheaper for buyers using other currencies.
OIL'S AUGUST SLUMP
Crude in New York is on track to finish the month down about 6 percent, after rising in July and June.
Prices in May, their most recent month of decline, hit a 2010 low of US$64.24 on the 20th day of that month, the weakest front-month price since July 30, 2009, after reaching the 2010 peak of US$87.15 on May 3.
Brent has been at an atypical premium to US crude, the result of North Sea supply disruptions and high US stockpiles, especially at the Cushing, Oklahoma, delivery hub for US benchmark West Texas Intermediate.
STORM WATCH
Traders remain wary of supply disruptions that can occur during the Atlantic hurricane season.
Authorities were worried that powerful Hurricane Earl could brush up against the US East Coast, and in addition to Earl, the US National Hurricane Center was monitoring two other tropical systems in the Atlantic basin.
So far, computer models showed no immediate threat to energy infrastructure in the Gulf of Mexico region
US crude for October delivery fell US$1.95, or 2.61 percent to US$72.75 a barrel by 12:30 p.m. EDT (1630 GMT), having traded from US$72.61 to US$74.73. ICE Brent for October dropped US$1.64 to US$74.96 a barrel.
The market was awaiting US inventory data from the American Petroleum Institute at 4:30pm EDT (2030 GMT), with analysts in a preliminary Reuters poll forecasting a 1.3-million-barrel gain in crude stocks in the week to Aug. 27.
Adding to the bearish sentiment was a report from the Institute for Supply Management-Chicago that showed business activity in the US Midwest slowed in August.
But oil regained some ground after data showed US single-family home prices rose more than expected in June and again when the Conference Board said US consumer confidence rose in August.
"Crude got some bounce from the consumer confidence and home price numbers that lifted the stock market, but the (oil) market is cautious ahead of the big jobs number on Friday," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
Wall Street erased initial losses and moved higher after the consumer confidence and home price reports helped soothe some investor anxiety about the strength of the economy.
Still on tap for yesterday release are the Federal Open Market Committee's minutes from its Aug. 10 meeting. On Friday, markets will react to the key August US nonfarm payrolls report.
Data from Japan was mixed, with total oil product sales up more than expected in July, but August manufacturing activity expanding at the slowest pace in more than a year.
Crude failed to get a boost from further weakness in the dollar. The yen came within reach of a 15-year high against the US currency, which slipped against the euro. The dollar index also weakened.
A weak dollar can boost oil prices because it makes dollar-denominated oil cheaper for buyers using other currencies.
OIL'S AUGUST SLUMP
Crude in New York is on track to finish the month down about 6 percent, after rising in July and June.
Prices in May, their most recent month of decline, hit a 2010 low of US$64.24 on the 20th day of that month, the weakest front-month price since July 30, 2009, after reaching the 2010 peak of US$87.15 on May 3.
Brent has been at an atypical premium to US crude, the result of North Sea supply disruptions and high US stockpiles, especially at the Cushing, Oklahoma, delivery hub for US benchmark West Texas Intermediate.
STORM WATCH
Traders remain wary of supply disruptions that can occur during the Atlantic hurricane season.
Authorities were worried that powerful Hurricane Earl could brush up against the US East Coast, and in addition to Earl, the US National Hurricane Center was monitoring two other tropical systems in the Atlantic basin.
So far, computer models showed no immediate threat to energy infrastructure in the Gulf of Mexico region
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